HONG KONG: Russia will set up a planned $10 billion investment fund in early summer to aid foreign investors, President Dmitry Medvedev said in Hong Kong on Sunday, as Moscow courts companies to inject cash into the $1.3 trillion oil-fuelled economy.“Russia has taken a course to promote modernization and innovative development. Foreign investments play a special role in this process,” Medvedev said at a breakfast with Hong Kong and Russian business leaders. Moscow is keen to attract foreign investment to promote hi-tech clusters in an attempt to move away from a commodities-driven economy. Medvedev had announced in Davos that Russia was planning to set up the $10 billion fund. It will be coordinated by state-run bank VEB and funded from the federal budget.Moscow aims to attract $60-90 billion into the fund in the next five years, VEB`s Chairman Vladimir Dmitriev told the Wall Street journal earlier this year.
But investors have so far been tepid about direct investment in Russia, partly due to corruption.“We will democratise our economy… we will fight graft. And in this sense Hong Kong’s experience is extremely indicative for us,” Medvedev said.He said Hong Kong’s rich experience could also help set up a global financial center in Moscow. Western executives say the biggest barriers for business in Russia are alarming levels of official corruption, mounds of red tape and the lack of consistent rule of law.Medvedev has repeatedly singled out endemic corruption as one of Russia’s most serious problems but admitted last July that his administration had made almost no progress in fighting graft since he was sworn in as president in May 2008.Many businesses operating in Russia say corruption and bureaucracy have actually worsened during his tenure. Companies ranging from IKEA, the world’s biggest furniture retailer, to fund managers such as Hermitage Capital Management, say they have fallen foul of corrupt Russian officials.